In June 2019, the SEC requested public comment on ways to simplify, harmonize and improve the exemptions from registration under the Securities Act of 1933. In this concept release, the SEC identified a number of topics to be addressed, including:
- evaluating the overall framework and coverage of the existing exemptions from registration;
- adjusting the limitations on who should be permitted to invest in particular exempt offerings (and in what amounts), such as the Regulation D “accredited investor” criteria;
- facilitating the transition of an offering from one type of offering to another (such as when a Regulation D offering becomes a public offering, and the reverse); and
- updating secondary trading rules with respect to securities that were offered in an exempt offering.
The SEC’s press release and fact sheet about the review may be found at the following link: https://www.sec.gov/news/press-release/2019-97 A public comment period will be open for 90 days.
Any developments in this area will be of interest to the structured products industry. For example, the use of non-registered platforms for structured note offerings can reduce the SEC filing requirements, and reduce other offering expenses. In addition, non-registered offerings are not, strictly speaking, subject to the limitations on underlying assets that are imposed by the so-called Morgan Stanley/Reading Room letter.10 Additional flexibility for the use of non-registered offerings may broaden the use of these types of offerings in the future.